Sector Momentum in Homebuilders and Semiconductors

Nick Perry (Schaeffer's Investment Research) submits: Last week we saw that most groups gained ground with the iShares Silver Trust (SLV) and PowerShares Networking Fund (PXQ) leading the charge. This week we once again have an upside bias:

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Housing stocks took the lead, as the SPDR Homebuilders fund (XHB) outpaced semiconductors, networking, wireless, aerospace, and pharmaceutical groups. The dominance of tech-sub groups was enough to boost general technology funds as we see one of the ETF giants, the Nasdaq-100 Trust (QQQQ), making a rare appearance. A look at the bottom half of the list shows that commodity-related funds lagged the action, as did bonds.

The rally in the XHB is interesting given the news out this morning about housing starts. The data showed a six-year low (see more details) and the SPDR Homebuilders fund (XHB) opened lower. However, by midday trading, the fund had worked its way back to breakeven to secure the gains picked up earlier in the week. One of the interesting aspects of this group has been its ability to shrug off bad news. As I noted last month the headlines from the housing group have been far from "cheery" but the group is still holding above its mid-July lows.

For those interested in digging into the XHB, the table below shows the component stocks, sorted by their weighting in the fund, along with their return for this week: